idea

So you’ve got an idea for a business. This one’s stuck in your head. It’s an exciting feeling – your new business is starting to take shape and you don’t see any major roadblocks that you can’t envisage being able to overcome. So what next?

One thing should take priority at this point: validating the commercial viability of the idea. Or in short, find out if it’s a winner.

“But wouldn’t it be faster to just not bother?”

To do this, I try to answer these questions:

What problem is being solved? Looking at it from the buyers perspective, what problem do they have that your offering will fix?

Who, specifically, would pay money to have this problem solved? People and organisations have lots of problems, but is the one your proposing to solve big enough to make them need/want to spend money to fix it? Do those people have the money?

How urgent a problem is it for those people? If it’s a problem that’s way down their list of priorities you may have trouble getting and keeping their attention long enough to make a sale.

Who else solves this problem, or similar problems? Who are your competitors, or who could easily become a competitor when they see the opportunity you’re exploiting? What indirect competition is there for the budget you hope is spent with you?

Why would somebody choose this solution over the alternatives or what they use currently? What is truly unique about your idea that also gives a compelling reason for your target client to buy from you? This is usually the hardest question to answer. What unique advantage do you have that someone else couldn’t easily replicate?

Where are those people located and how can they be accessed? If you can’t connect with your target customers, it’s pretty difficult to make a sale.

7 billion people and all I need is for each of them to send me a dollar: not a commercially viable idea.

After answering all these questions carefully, with some research to back up your assumptions, you should have good initial insight into the scale of the opportunity. The trick is to minimise the risk of starting up and chasing that opportunity, while not over-researching and becoming paralysed by a fear of getting it wrong. Risk is inherent to startups – it’s an essential and exciting part of any new venture that you need to embrace and accept, but you also want to be reasonably sure you have good odds of putting together a sustainable business that can thrive and grow.

It should become fairly obvious if the idea you’re looking at is truly great, or just OK, or worth assigning to the ‘Maybe Not’ pile. This approach isn’t just for startups – I use it to validate almost all new ideas. It’s also important to revalidate the idea constantly over time using the same formula as you move into the startup phase, learn more about your market, target clients, competition, etc.

Gordon eventually realised his idea for Stay Wet Paint wasn’t a runner.

This approach also gives you confidence that your idea is worth hearing about. When you speak to potential partners, clients and funders you’ll have the ability to answer the questions they’ll inevitably ask, while managing to sound relatively clued-in and intelligent!